Two leading indicators — applications for purchase mortgages and the number of homebuyers entering into contracts to purchase homes — suggest sales of resale homes hit bottom in July and will rebound this fall, economists at mortgage insurer The PMI Group Inc. conclude.

In their latest monthly Housing and Mortgage Market Review, PMI Chief Economist David Berson and analyst Brett Soares make a case that existing-home sales will show "some modest gains" in August, September and even October.